Denmark's Systemic Risk Council proposed the introduction of new loan sanctions this Spring, but what will happen to the plan is far from clear. The proposal was scheduled to take effect last week. Danish Minister of Trade and Industry, Brian Mikkelsen, has said that he is open to a slower implementation of the rules, but the Liberal Alliance believes they should be scrapped altogether – along with the whole council.
LA spokesman on trade and industry, Joachim B. Olsen, tells Inside Business that he does not find the intervention to be necessary, and that the concept of the Systemic Risk Council itself doesn't work because it does not leave enough room for debate about its proposal for the government.
"It's problematic that the Systemic Risk Council can de facto introduce regulations without any significant debate. I'm in favor of shutting down the Systemic Risk Council and instead gathering votes for tighter rules. This limitation on loans has serious consequences for real people in the real world. A lot more consequences that other laws we implement in the Danish Parliament," says the spokesman.
The Danish People's Party is also skeptical towards the loan limit, and spokesman in trade and industry, Hans Kristian Skibby, has asked the minister of trade and industry for a statement. However, he is not in favor of shutting down the Systemic Risk Council right away, but he believes the matter requires further investigation.
The new loan rules would entail that credit institutions as of Oct. 1 had to limit variable rate loans and deferred amortization for customers whose total debt after house buying exceeds 400 percent of income before tax. This type of loan was to be limited to 15 percent. It is currently about 35 percent.
English Edit: Marie Honoré